Maxim manufactures a hamster food product called Green Health. Maxim currently has 10,000 bags of Green Health on hand. The variable production costs per bag are $1.80 and total fixed costs are $10,000. The hamster food can be sold as it is for $9.00 per bag or be processed further into Premium Green and Green Deluxe at an additional cost. The additional processing will yield 10,000 bags of Premium Green and 3,000 bags of Green Deluxe, which can be sold for $8 and $6 per bag, respectively. Assuming Maxim further processes Green Health further into Premium Green and Green Deluxe, revenue from the two products would be:
A. $6,000.
B. $96,000.
C. $2,000.
D. $8,000.
E. $98,000.
Answer: E
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Price is best described as:
A. that which is given up in exchange to acquire a good or service B. money exchanged for a good or service C. the psychological results of purchasing D. the cost in dollars for a good or service as set by the producer E. the value of a barter good in an exchange
Black Corporation's sales are $600,000, its fixed expenses are $150,000, and its variable expenses are 60% of sales. The margin of safety is:
A. $190,000 B. $240,000 C. $225,000 D. $90,000
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Indicate whether the statement is true or false.
A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts: Accounts receivable$35,000debitAllowance for uncollectible accounts 500creditNet Sales 180,000creditAll sales are made on credit. Based on past experience, the company estimates that 0.6% of net credit sales are uncollectible. What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared?
A. $1,500 B. $1,080 C. $1,775 D. $1,275 E. $2,500